Swedish real estate group SBB secures cash with JM stake sale

Industry:    2023-05-12

Troubled Swedish real estate group SBB has sold most of its shares in construction company JM for 2.8 billion Swedish crowns ($276 million), the company said, taking a significant loss on a stake bought less than two years ago.

The transaction gives SBB a much-needed cash infusion after scrapping a share issue this week when ratings agency S&P Global downgraded the company’s debt to junk status.

Rising interest rates, soaring inflation and growing debt have hit real estate companies in Sweden, which the country’s policymakers see as a risk to financial stability.

SBB shares rose as much as 8% early on Friday, before reversing to trade flat at 0744 GMT. The stock is down 61% year to date.

The company said it had sold 19 million shares in JM, corresponding to a stake of 29.5%, at a price of 148.1 Swedish crowns per share, reducing SBB’s stake to just 2.9%.

“The sale enables a focus on the company’s core business and a further strengthening of SBB’s financial position,” SBB founder and CEO Ilija Batljan said in a statement released late on Thursday.

An SBB spokesperson declined to give further comment.

SBB originally bought most of the shares, a roughly 20% stake, in June 2021 for 326.30 crowns per share.

The sale at less than half that price could trigger an accounting loss of some 3 billion crowns, Carlsquare analyst Bertil Nilsson said.

SBB is likely to continue selling off assets this year to reach a goal of divestment amounting to 6 billion crowns, the analyst added.

The company said last year that it regarded its JM stake as a strategic asset and that it should be viewed as a long-term investment.

SBB’s shares are subject to more short-selling than any other Swedish stock, data from the country’s financial regulator shows, with 19% of the total sold short as traders expect the company’s value to decline.

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